Cocoa Prices to Stay High Despite Projected Surplus in New Season
TLDR
- Cocoa production forecasted to increase in 2024-25 season, but not likely to impact chocolate prices significantly.
- Previous poor harvests in West Africa led to cocoa price spikes due to major shortage.
- Global cocoa output in new season expected to surpass demand by 90,000 tons, mainly due to improved yields in top grower Ivory Coast.
Cocoa production is expected to improve in the 2024-25 season but it may not be enough to significantly lower chocolate prices.
Poor harvests in West Africa caused a major shortage and drove cocoa prices to record highs. The International Cocoa Organization (ICCO) estimates a 2023-24 shortfall of 462,000 tons, the largest in decades.
Attention is now turning to the new season with global cocoa output expected to exceed demand by about 90,000 tons, thanks to better yields in top grower Ivory Coast.
Key Takeaways
Although cocoa futures have dropped roughly 30% from their April highs, the market remains tight. Stockpiles are at their lowest levels in decades, and a small surplus is unlikely to restore inventories to more comfortable levels. Analysts suggest that prices will remain historically high for some time. While favorable weather has improved conditions in Africa, the cocoa market is still under pressure due to lingering issues such as crop diseases, low investment in plantations, and the sale of farmland for illegal mining. Both Ghana and Ivory Coast are raising farmer pay for the new season, with Ghana increasing payments by 45% and Ivory Coast considering at least a 23% hike. These price hikes, while beneficial to farmers, fall short of global market prices and could further limit a production rebound.
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